What does the high level of open positions in CME Bitcoin futures contracts near the 2021 peak indicate?

What does the significant number of open positions in CME Bitcoin futures contracts near the 2021 peak suggest?

Author: Tom Mitchelhill, Cointelegraph; Translator: Song Xue, LianGuai

According to data from Coinglass, the open interest of CME Bitcoin futures has increased from $3.63 billion to $5.2 billion in the past 30 days. Along with the surge in open contracts, Bitcoin has also risen by 26%, with the current trading price slightly above $44,000.

On December 6th, the open interest of CME Bitcoin futures reached $5.2 billion. Source: Coinglass

• Did Retail Traders Miss the Boat on Bitcoin and Ether?
• Why Crypto Firms Should Take A Page From Binance’s Book CFTC Commissioner Kristin Johnson
• The Crypto Enforcement Show: Binance Takes Center Stage

From October 1st to October 21st, the open interest of CME Bitcoin futures skyrocketed from $1.46 billion to $5.45 billion.

The rapid increase in open contracts coincides with the significant rise in Bitcoin prices, which have surged from $45,000 to $66,000.

IG Australia analyst Tony Sycamore pointed out that the increase in open contracts indicates renewed interest in Bitcoin, but this does not explain the positioning of CME traders.

Sycamore explained that a report submitted to the Commodity Futures Trading Commission by CME on November 28th showed that “big players” on their platform held net short positions, with 20,724 shorts and 18,979 longs.

As of November 28th, CME futures positions were net short. Source: CFTC

Sycamore stated that investors will not be able to accurately determine the positioning of CME participants until the latest report is released on Tuesday, December 12th.

Sycamore said, “What we can’t see right now is whether the big players have switched from net short to net long.” “If we see the market becoming very long, you’d be very worried about a pullback. Last week, we saw the market being quite short, so I don’t think we’re there yet.”

Sycamore added that the driving force behind the significant rise in Bitcoin prices is not just speculation about the SEC approving a series of spot ETF products. The decision regarding the ETFs will be made in early January.

“I think there needs to be more driving force now. It’s no longer just about ETFs or halving speculation. It’s starting to show its own vitality.”

Sycamore stated that the recent rise in Bitcoin is likely more closely related to the relationship between cryptocurrencies and the macro environment, with signals of the Fed starting to cut interest rates seen as a more significant driver of price trends.

Many analysts believe that the approval of spot ETFs will lead to a rapid rise in Bitcoin prices, but not everyone believes that the current upward trend can be sustained, and some predict “sell news” events in the days or weeks following potential approval.

We will continue to update Blocking; if you have any questions or suggestions, please contact us!